Bangladesh-Bhutan-India Nepal Motor Vehicle Agreement

I am indeed very happy to be here and speak a few words in the inaugural session of the launch meeting of the project BBIN MVA implementation. Advancements in technology as well as integration of individual economies in the complex web of global economy have brought people, government and businesses of the world unprecedentedly close to each other. Yet we face challenges such as rigid national demarcations, reservations generated from socio-political differences etc. Where countries can overcome these challenges they move forward at a tremendous pace, and where this does not happen they lag behind.

In today’s globalized world, trade facilitation has emerged as one the core instruments for unlocking the possible gains from inter-country trade. Trade facilitation reduces cost of doing business significantly and such measures benefit all stakeholders.There are numerous practical examples of such collaboration. In contrast, South Asia as a region appears to have been lagging way behind the global trend. Intra-regional trade is only6 percent of the total trade of South Asian countries. This ratio is stunningly low when compared with that for EU, NAFTA and ASEAN (66 percent, 48 percent and 27 percent respectively). Despite being one of the fastest growing regions of the world, lack of connectivity and economic integration is limiting the economic prospect of the region.The transit countries have been struggling to negotiate among themselves through the SAARC platformto reduce current physical and non-physical barriers to transportation. The progress in that front has been, however very slow for lack of desired level of regional political understanding.

To address the need of the hour, four countries of the BBIN sub-region signed the BBIN-MVA in June 2015, with aims of replacing large-scale transshipment operations with easy movement of vehicles across the border. The BBIN-MVA can be the solution which has the potential to bypass much of the hurdles of existing transshipment based operations. To that end we can obviously learn from international experiences, point out challenges on the way of smooth operationalization of the agreement, and identify way forwards to address these challenges together.

Overview of the BBIN-MVA

The BBIN MVA was signed in the BBIN Transport Ministers Meeting on 15 June 2015 in Thimphu, Bhutan. The need to accelerate cross-border transport facilitation to deepen and enhance regional integration has been officially recognized through this agreement. Governments have agreed that the finalization of the BBIN MVA would allow moving forward, in an accelerated fashion, with implementation of land transport facilitation arrangements between and among these countries. This, in turn, would enable the exchange of traffic rights and ease cross-border movement of goods, vehicles and people, thereby helping expansion of the people-to-people contact, trade, and economic exchanges among the countries.

The agreement has identified 14 routes for regular and non-regular passenger vehicles between the countries. Of these 5 are between India and Bangladesh, 2 between Bangladesh, India and Nepal, 2 between Bangladesh, India and Bhutan, 1 between India and Nepal, 3 between India and Bhutan, and 1 between Nepal and Bhutan. For cargo vehicles 15 routes have been designated, of which 5 are in Bangladesh, 4 in Bhutan, 1 in India, 5 in Nepal.The agreement has identified 30 priority road construction projects and of these 7 are in Bangladesh. Of these 7 projects, 3 involve new road constructions and the other 4 involve four laning of existing roads/highways.

It is quite clear that the operationalization of the BBIN-MVA is well on its course as major roads/highways construction projects have been undertaken and are being implemented accordingly. Yet, attributing due significance to construction of the roads/highways it must also be pointed out that operationalization of the BBIN-MVA goes well beyond just constructing and/or repairing the roads/highways. It is in this context, creation of a common platform of diverse stakeholders becomes important. This also necessitates comprehensive understanding of the existing barriers and better consensus on the need for trade facilitation. Better clarity and understanding by project implementation teams from all four countries regarding hurdles, approach and strategies is also of critical importance.

Learning from Best Practices

While there is no doubt about the benefits of bilateral and regional agreements, there of course are concerns about how to ensure these benefits can be reaped by all parties involved through effective and efficient operationalization of these agreements. To this end, luckily there are numerous best practices to learn from

A common characteristic of many of these agreements is clarity amongst the overarching objectives of these agreements. For example, the core objective of the Tripartite Agreement on Road Transport-East African Community (EAC) is reduction of tax evasions. Similarly, in case of the ASEAN Framework Agreement on the Facilitation of Inter-state Transport (AFAFIST) focuses on effective and efficient operationalization and implementation of the ASEAN Free Trade Area (FTA). The AFAFIST has also set a good example regarding putting forward the guiding principles that govern the entire operation. These are the principles of consistency, simplicity, efficiency, non-discrimination, fair competition, transparency and mutual cooperation.

Legal clearance for the transport operators to operate in foreign countries is another critical area of concern. In case of the – Greater Mekong Sub-region Cross-Border Transport Agreement (GMS-CBTA)there is a competent authority in the ‘home country’ which is authorized to issue the license (legal clearance) to the transport operators. Criteria for getting such clearance include financial soundness, no criminal record, safe operations management capacity etc. GMS-CBTA also articulates the highway standard and pavement types according to the vehicle loads. Such specifications are important to regulate and manage road traffic movement in a synchronized manner. GMS-CBTA practices regarding setting clearance priority is another aspect of this agreement that needs to be replicated for BBIN-MVA. For example, this agreement clearly states that sick passengers are to be cleared first, then perishable foodstuffs, followed by livestock, and then other merchandise.

The point to be noted, of course, is that none of the so far mentioned multilateral agreements are being said to be ideal models, while all of them have aspects that need to be thoroughly comprehended and contextualized prior to replication for operationalization and implementation of BBIN-MVA. This necessitates closer observation of the current status of these agreements, challenges they are facing, the coping mechanisms (if any), the way forwards being considered by the stakeholders etc.

Challenges Ahead

The BBIN-MVA is undoubtedly going to revolutionize the socio-economic status quo prevailing in the sub-region, and it is quite apparent that all parties involved are eager to cooperate and contribute as much as possible so that everyone can reap the benefits. Yet, there are numerous hurdles to overcome.

Mobilization of needed financial resources

One estimation by the BBIN Ministerial meeting shows USD 8 billion will be needed for the already identified 30 priority projects. This implies resources have to be mobilized from both traditional financers like the World Bank, ADB etc. as well as the new ones such as the Asian Infrastructure Investment Bank and BRICS Development Bank. Resorting to Regional Development Fund is also most likely to become necessary. The development of regional road network needs to be perceived as a regional priority as this is to induce enhanced regional integration, increase trade and commerce which in turn are bound to contribute in economic development and poverty reduction in the region as a whole. Finally, there is the obvious choice of going for Public Private Partnerships (PPPs). Governments of each of the countries need to consider PPP as one of the best options to attract private investment for commercially viable infrastructure projects. One can certainly learn from the successful PPP projects implemented in Sri Lanka and India.

Harmonizing the Standards & Practices

Harmonization of design standards for roads, bridges including signs and signals, design speed, axle load etc. between signing countries are of critical importance for effective and efficient operationalization of agreements such as BBIN-MVA. This necessitates addressing differences in standards both across and within countries. This in turn requires collaboration between the stakeholders and exchange of ideas and practices.

Preparation & Adoption of Protocols & SOPs

Preparation and adoption of the protocols and Standard Operating Procedures (SOPs) are key concerns for multilateral vehicle agreements. International best practices need to be consulted for this purpose. Inter-Ministerial coordination within the country and reaching consensus on key aspects of protocols and SOPs across countries are the major challenges in this context.

Strengthening Institutions

MVAs are relatively new for the BBIN countries. Hence strengthening of the relevant institutions with well-endowed human resources is a task of critical importance. Institutions need to have the necessary capacities to be able to effectively and efficiently deal with issues in the area of development, coordination, harmonization and standardization of the protocols and SOPs, dispute settlement, fixation of fees, service charges, surcharges etc.

Agreeing about Fees, Surcharges & User-Chargers

Bringing all parties involved to an agreement about the applicable fees, surcharges and user-charges is another key point of concern. The point here is that all agreeing countries will be incurring costs, both social, environmental and economic. Hence, the fees and charges are to be fixed in a manner that ensures compensation for these costs. Benefit sharing has to be considered as the key strategy in this regard. Reciprocity in allowing flexibilities as well as support provided by countries in developing infrastructure also need to be considered.

Coordination of In-Country Stakeholders and Alignment with National Policy

Coordination among the different ministries and departments within a single country is pivotal to successful operationalization of the MVA. Alignment with connectivity strategies and allocations envisaged in the Five Year Plans and the Annual Development Program say for Bangladeshis of equal importance.

The Security Concerns

Ensuring security of persons, vehicles and cargo during in-country movement and border crossing is another crucial concern. Incident management system and road information system may be introduced to ensure security through installation of tracking equipment and vehicle and driver detection system, as also for safeguarding against violation of law and addressing and mitigation consequences of accidents and vehicular malfunctioning. Intensive use of ICT in a well-synced manner can be an effective strategy in this regard.

Business Model Development by the Private Sector

The task to be undertaken particularly by the private sector of Bangladesh and other BBIN partners entails development of business models that maximizes the potential benefits from the commercial and business activities which will be encouraged and stimulated consequent to operationalization of the BBIN-MVA.

What is to be Done: Prudence & Innovations

Clearly there are numerous hurdles on the way. But the potential benefits of overcoming these are unanimously overwhelming. Diligent leadership and great minds from all BBIN countries hence need to come forward to overcome these barriers and make BBIN-MVA a success. We have already discussed some strategies to confront these challenges. Let me bring to your notice some additional tasks that will enable even better operationalization of the BBIN-MVA.

Prioritizing Needs of the Landlocked Countries

Priority has to be given all the time to the needs of the landlocked countries (Bhutan and Nepal). To ensure immediate access for them to the nearest seaports, Bangladesh now is emphasizing on improving those sections of its road network that allow these landlocked neighbors to access the two seaports of Bangladesh- Mongla and Chittagong.

Cautious Land Acquisition

Bangladesh is a land scarce country. So are other BBIN countries. On the other hand, the development of road infrastructure involves huge land acquisition and resettlement activities. Hence, road construction needs to be carefully prioritized in a manner that ensures efficiency. So, priority should be given to those road stretches that will see concurrent development on both sides of the border.

Improvement of Sub-Standard Sections of the Road Networks

The improvement of substandard sections of the roads is crucially important for reaping the benefit of a highway network. Each country should identify the substandard sections in its territory and focus on how to improve those stretches as early as possible.

Promoting Multi-Modal Transportation

It has to be noted that each mode of transportation has its comparative advantage in terms of cost, flexibility and accessibility. Hence, integration of modes is most likely to result in reduced overall cost of transportation as well as minimizing environmental externalities.

Developing Dry Ports

In order to reduce logistic costs, countries must strengthen trade facilitation programs to ensure improved performance in trade across borders. Dry ports development and seamless operation is pivotal in this regard. BBIN countries need to identify potential dry port spots for development and at the same time develop to an agreed standard the existing ones. Bangladesh has identified 17 dry ports for development and operation (8 already existing and 9 identified as potential spots for development).

Concluding Remarks: Catching Up & Moving Ahead

It is true that we have now an unprecedented opportunity to foster regional cooperation for everyone’s benefit. But at the same time it is also a great responsibility. Hence, we must give our very best to make BBIN-MVA a success so that more can be built upon it. Given this perspective we have joined hands with CUTS International to monitor closely the pace of implementation of the BBIN-MVA. The think-tanks of the region will watch from close quarters the progress of the implementation of the agreement and provide necessary backstopping services to the implementing agencies. I am encouraged to see most of the representatives of the implementing agencies of the sub-region participating in this meeting. This will provide a unique opportunity to the researchers to know from them the kind of challenges which the agreement may face. We will ensure process documentation of the implementation experience of the agreement and provide policy inputs to the implementors on how to overcome those challenges. Together, we will certainly be able to see the agreement being implemented without major hickups. I wish good luck and every success in smooth implementation of this agreement, which I believe will lead to desired synergies for deeper sub-regional and regional economic integration.